International countries vs. SADC economic Development context overview TIPED GGDA November 9th, 2017 Welcome

The global US fed rate benchmark The global US fed rate benchmark.. Cost of money is rising from unprecedented “cheap money” stimulus

USA Non farm payrolls are also looking healthy… why are they important?

How well do you understand the SADC region and the various economies How well do you understand the SADC region and the various economies? What lessons from the past can be applied to future policy?

SADC economies grew by an average of 4 SADC economies grew by an average of 4.7% annually, but with significant variance in SADC growth rates over 10 years GDP per capita growth (annual %) 2003–2013 Source: World Bank, World Development Indicators , http://data.worldbank.org/data-catalog/ worlddevelopment-indicators, accessed 22 October 2014 Angola Botswana Lesotho Madagascar Malawi Mauritius Mozambique Namibia South Africa Seychelles Swaziland SADC Tanzania Zambia Zimbabwe -4 -2 2 4 6 8 DRC* * Democratic Republic of the Congo “European Union’s average of about 2% per year, but SADC lags behind other developing regions such as ASEAN which grew at 7.4% per annum” (world bank)

South Africa is the main player, followed by Angola and Tanzania Regional GDP country share in SADC, 2013 Source: World Bank, World Development Indicators , http://data.worldbank.org/data-catalog/ worlddevelopment-indicators, accessed 22 October 2014 Democratic Republic of the Congo 4,2% Namibia 1,9% Mozambique 2,3% Mauritius 1,9% Malawi 1,1% Madagascar 2,7% Lesotho 0,4% Botswana 2,7% Angola 13,6% Zimbabwe 2,0% Zambia 3,9% Tanzania 7,1% Swaziland 0,7% Seychelles 0,2% South Africa 55,5%

Ten most inhibiting factors to doing business The Global Competitiveness Report 2014–2015 shows that access to finance, the prevalence of corruption and red tape, insufficient human capital and a lack of physical infrastructure remain significant inhibiting factors to doing business in SADC. Ten most inhibiting factors to doing business Source: World Economic Forum, Global Competitiveness Report 2014–2015 , http://www.weforum.org/ reports/global-competitiveness-report-2014-2015 Percentage of responses Access to financing Corruption Inadequate supply of infrastructure Inefficient government bureaucracy Inadequately educated workforce Poor work ethic in national labour force Restrictive labour regulation Tax rates Inflation Crime and theft 0 2 4 6 8 10 12 14 16 18

All SADC countries lost ranking in ease of doing business over last 10 years, with the exception of Tanzania from a low base Country 2006 (155 countries) 2010 (183 countries) 2014 (188 countries) 2015 (189 countries) Change in rank 2006 to 2015 Angola 135 171 179 181 -46 Botswana 40 52 56 74 -34 DRC 155 176 183 184 -29 Lesotho 97 142 136 128 -31 Madagascar 131 144 148 163 -32 Malawi 96 141 164 -68 Mauritius 23 21 20 28 -5 Mozambique 110 132 139 127 -17 Namibia 33 98 88 -55 Seychelles N/A 109 80 85 South Africa 32 36 41 43 -15 Swaziland 123 Tanzania 140 125 145 +9 Zambia 67 83 111 -44 Zimbabwe 126 168 170 -45 World Bank, Ease of Doing business 2006, 2010, 2014 and 2015 rankings Source: World Bank, Doing Business 2015: Going Beyond Efficiency. Washington, DC: World Bank,

SADC Sectors’ contribution to GDP (%), 2013 Country Agriculture Industry Services Angola 10.83 56.98 32.18 Botswana 2.54 36.91 60.55 DRC* 25.16 35.09 39.75 Lesotho* 7.83 36.57 55.60 Madagascar* 29.11 16.00 54.89 Malawi 26.96 18.79 54.25 Mauritius 3.27 23.07 73.66 Mozambique 29.25 23.66 47.09 Namibia 7.07 29.64 63.29 Seychelles* 2.09 15.42 82.49 South Africa 2.39 27.58 70.03 Swaziland* 7.48 47.69 44.83 Tanzania 27.00 25.18 47.82 Zambia 17.68 37.25 45.07 Zimbabwe 12.38 31.29 56.33 SADC (simple average) 14.07 30.74 55.19 In spite of efforts to increase trade within SADC, intra-regional trade has stagnated at a relatively low level. Data from the International Trade Centre and the World Trade Organisation (UKAID, 2014) for 2010 reveal that intra-SADC trade shares are distributed highly unevenly among its member states, ie, some countries benefit more than others from intra-regional trade in SADC. South Africa dominates intra-SADC exports with the lion’s share – approximately 68.1%. Comparing the 2003 to 2013, agricultural sector shrank by two percentage point and the services sector, increased by two percentage point. In Asia services sector grew at a much higher rate (GIZ)

Angola GDP: consistent growth but with high variances

Angola: Significant variations in the cost of borrowing – and expected returns

Tanzania: A solid track record of GDP growth, in distinct cycles

Tanzanian inflation is rising again Tanzanian inflation is rising again.. With a threat of inflation, but is this risk worth the potential growth benefits?

Tanzanian growth has strongly followed interest rate cuts…

Angola GDP : strong relationship between GDP and interest rate

Botswana: indicators suggest inflation is firmly under control… and low interest rates are in place. With cheapest money in the region – what more can Bots do to encourage growth?

Botswana: GDP is ticking up again…

Botswana: unemployment running at 20% vs. 13% in Tanzania…

South Africa Economic Indicators                                                   Overview Last Reference Previous Range Frequency GDP Growth Rate 2.5 % Jun/17 -0.6 -6.1 : 7.6 Quarterly Unemployment Rate 27.7 % Sep/17 27.7 21.5 : 31.2 Inflation Rate 5.1 % 4.8 0.2 : 20.7 Monthly Interest Rate 6.75 % Oct/17 6.75 5 : 23.99 Daily Balance of Trade 4002 ZAR Million 5975 -23426 : 18731 Government Debt to GDP 51.7 % Dec/16 49.3 27.8 : 51.7 Yearly Positive Real interest rates : 1.65%, Positive balance of trade – switch from historical deficits Climbing and v. high unemployment rates and Government Debt

South African growth has been slow since the global crisis South African growth has been slow since the global crisis.. With a mild recovery from recession

RSA inflation targeting policy is clear to see RSA inflation targeting policy is clear to see.. But is it at the expense of growth?

RSA rates are still relatively low .. Compared to Tanzania

Despite the high unemployment, South African formal employment has doubled since 2002..

Chart shows where commentators derive their 6% growth rate target for RSA…

RSA Imports have risen despite a weak rand – what does this imply?

RSA Imports and exports

SA balance of trade has improved

Exports have also largely maintained their journey without seemingly being Rand affected?

RSA promotion to realise direct investment has been a great success

Nigeria vies with RSA as the largest African economy (81 million employed) … but it has hit a tough recession.. Average 4% per annum

Nigeria is just exiting from a tough recession.. But growth is limited

Nigerian Cost of debt has more than doubled, and inflation has only just begun to slow down… but at what cost to growth and households?

Nigeria currency follows the trend of SA Rand, but with 2 significant shocks

Nigeria commentary – a country stabilising after turmoil Nigeria's consumer prices increased by 16% year-on-year in September 2017. Surging inflation has accompanied falling growth and rising interest rates. With the base rate rising from just 6,25% to 14% in 5 years -     Nigeria's unemployment rate rose for the seventh straight quarter to 13.9 percent in the third quarter of 2016. It was the highest level since 5.10 percent in the fourth quarter of 2010. the number of unemployed rose to 11.2 million, employment rose at a much slower 0.6 percent to 69.5 million and the labour force increased 1 percent to 80.7 million Q: How many of you have a home loan? Nigerian housholds are now paying 130% more per month in the bond... Q: what do you think that does to spending on other items, the economy?  Q: What else might be causing a problem for Nigerian trade and economic context? Q: How Important is stability in supporting GDP growth?